Tag Archives: matt hodges
I'm often told that the information provided here is educational. Part of my own education is knowing the right people to whom I both direct my questions and clients. As such, I'll have a few posts in the next couple weeks from lenders whom I trust. First up is Matt Hodges discussing how FHA loans (which require at least 3.5% down payments and comprised about 10% *of the closed transactions in our market** in the past 14 months are becoming far less attractive. Next week's post should be an interesting one, too.
FHA does not want to be your first choice, period.
Since December, HUD has been anticipating changes to the FHA loan program. On January 31, HUD released a mortgagee letter which changes the program. To read the entire mortgagee letter, click here.
The first change goes into effect on April 1st – no fooling! Here’s what changes:
For loans less than $625,500 (which is everything in our market that uses FHA, as the high limit is $437,000 in the Charlottesville MSA), annual MIP increases 10 basis points (bps). This means that the $200,000 loan now costs $16/month more.
The June 3rd changes:
1. If one puts down 10% on a purchase, mortgage insurance premiums will last at least 11 years, which is up from the current 5 years.
2. If one puts down less than 10%, mortgage insurance premiums are PERMANENT, regardless of future loan to value.
3. 15 year loans with 78% initial loan to value no longer has annual mortgage insurance waived initially – you must pay for 11 years.
The threat of lowered interested party (seller, Realtors, etc) concessions from 6% to 3% of the sales price, has not materialized yet. Our belief is that could prevent the lower priced homes from being able to use the FHA program, which might be discriminatory. It is still being considered, and it might have a ceiling and then tiered percentages below that.
Keep in mind, these changes are for pulling a case number, NOT closing. So, as long as we get the loan application done by March 29th for the first change and May 31st for the second set of changes we will still be using the current standards.
4. MIP = Mortgage Insurance Premium
5. Basis points = percent of the loan amount that you pay the insurance on. For example, 10 basis points on the annual MIP = .1% of the loan or $200,000 x .1% = $200 / 12 months = $16.67 per month.
Basically, talk to a great lender early in the process.
If you're feeling like the past month of real estate data releases hasn't satiated your need for real estate information and analysis, you're invited to listen to Matt Hodges and me this Sunday morning at 11am on WNRN radio. Whenever we do this, it's a lot of fun - talking for an hour about real estate, mortgages, the market and often times quite a bit more generally leads to a useful and informative conversation.
If you're local, tune in to 91.9. If you're not local (or don't have a radio) the interwebs have you covered.
We tend to prep for four hours' worth of radio, talk for about and hour, and get through 20% of what we have available. Live radio is always a bit nerve-wracking as the conversation is largely unscripted, but the resulting hour podcast is something that:
1) Usually generates inspiration for at least five stories
2) I tend to refer to frequently as I typically learn something from all of the prepping and resulting conversation.
So … in prepping for the show, we're tentatively planning on talking about:
- The Charlottesville real estate market (naturally) - how it's doing, how it might do in 2013
- When buyers and sellers should start their respective processes. (now)
- Real estate assessments (they're coming out very soon) and their impact on actual market value
- The Consumer Financial Protection Bureau's recent rules (800 pages of them) and their potential impact on the market.
- Qualified Residential Mortgages (see above)
- New construction in Charlottesville
- Shadow inventory
- Redfields' buying open space
- More quality inventory
Suggestions welcome.After some more thought, I 'm thinking we might talk about the coming Wegmans and Fresh Markets, energy efficiency in homes, realtor productivity … one of the best parts of these shows are the recap posts I write that afternoon or next morning, replete with links, research, supporting information and more.